Federal Budget 2016/2017

In this edition:

Welcome

Superannuation - Accumulation Phase Measures

Superannuation - Pension Phase Measures

Individuals & Other Measures

Small Business & Company Measures

Personal income tax relief

From 1 July 2016, the income tax threshold at which the 37% tax applies will increase to $87,001 pa, from the current $80,001 pa.

Individual taxpayers with an income below the new threshold will not receive any tax cut. Those currently receiving above $80,000 pa will receive a tax saving. The maximum tax saving is $315 pa.

Medicare levy low income thresholds for 2015/16

For 2015/16, the Medicare Levy low income thresholds will be as follows:

• Individuals $21,335 (previously $20,896)
• Families $36,001 (previously $35,261)

The family income threshold (i.e., $36,001) will be increased by $3,306 (previously $3,238) for each dependent child or student.

For single seniors and pensioners with no dependants who are eligible for the seniors and pensioners tax offset, the threshold will be increased to $33,738 (previously $33,044).

Increasing the Small Business Income Tax Offset ('SBITO')

From 1 July 2016, the government will increase the current 5% tax discount (referred to as the SBITO) to 8%. The discount is currently available to an individual in receipt of income from an unincorporated small business entity ('SBE') (i.e., basically, an entity with an aggregated turnover of less than $2 million), and applies to the income tax payable on the business income received from such an entity.

The discount will remain constant at 8% for eight years, and will then increase to:

• 10% in 2024/25;
• 13% in 2025/26; and
• 16% from 2026/27.

The current tax discount (or SBITO) cap of $1,000 per individual for each income year will be retained. Access to the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

Tax Avoidance Taskforce

The government will provide $678.9 million to the ATO over the forward estimates period to establish a new Tax Avoidance Taskforce. This will enable the ATO to undertake enhanced compliance activities targeting multinationals, large public and private groups and high wealth individuals.

The Tax Avoidance Taskforce will conduct operations to improve tax compliance in high tax risk sectors, resulting in better targeted audits and higher collections.

The government will also ensure the ATO has access to the information it needs by enhancing information sharing between the ATO and the Australian Securities and Investments Commission. This supports the operation of the Taskforce through improved risk analysis and detection.

If you have any questions about how these measures may impact you, please contact the team at Goodwin Chivas & Co.